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The government has asked ministries, divisions and agencies to submit their development funding requirements in the upcoming fiscal year 2024-25.
The Economic Relations Division (ERD) wrote to concerned entities, urging them to send the information urgently.
To determine project aid for the upcoming ADP, the ERD will meet representatives from various ministries and agencies in a series of sessions from February 28. These meetings will continue until March 3.
In the current fiscal year 2023-24, the allocation for the Annual Development Programme (ADP) stands at Tk2.63 trillion.
As the authorities are now drawing up the revised annual development programme (RADP) for FY24, ministries and divisions are queuing up with requests to trim their development allocation.
In most cases, the entities seek to surrender development funds since they are unable to spend thanks to inadequate project execution capacity.
According to sources, the government is likely to slash project aid by 15 per cent in the revised development plan for FY24.
They say this biggest cut in recent years intends to trim development expenditures in response to the recent economic slowdown.
"While foreign aid is available, the government has taken a cautious approach to public spending given the sluggish economy, leading to cuts in project aid from the development budget," explained a senior Ministry of Finance official.
Echoing the same, a senior Planning Commission official confirmed a substantial reduction in the ADP due to the government's cautious spending approach.
Allocations from internal resources for FY24 will also be reduced, he added.
Planning Commission officials anticipate an overall decrease in the ADP due to "necessary reductions" in government spending. They may cut project aid by nearly 15 per cent, bringing it down from Tk940 billion to Tk800 billion.
"The Economic Relations Division (ERD) initially proposed Tk845 billion in project aid for the RADP, but we might revise the recommended allocations again to stay within the Tk800 billion limit suggested by the Ministry of Finance," said an ERD official.
Internal resource allocations are also likely to be trimmed to Tk1.46 trillion in the RADP, down from the current Tk1.64 trillion allocated in the original ADP for FY24.
An ERD official said they have already reduced project aid allocations to Tk835 billion, including some block allocations, in the forthcoming RADP.
Another Planning Commission official told The Financial Express that they have received the revised project aid allocations from the ERD and are now finalising the revised development plan.
The ERD official said, "Some large development budget holders have requested lower foreign aid than their current allocation in the upcoming RADP. This necessitates an overall 11 per cent reduction in project aid."
Meanwhile, a Planning Commission official noted that while many government ministries and agencies have improved their project aid utilisation during the first five months (Jul-Nov) of FY24, their allocations will still be reduced.
According to the Implementation Monitoring and Evaluation Division (IMED), government entities utilised 19.17 per cent of the total Tk940 billion project aid allocated in the current ADP.
This spending rate is almost 2 percentage points higher than the average ADP implementation rate for FY24.
"Development partners closely monitor aid-supported projects, leading implementing agencies to prioritise projects funded by the government. Government-funded projects typically have less stringent monitoring requirements," the official added.
In FY23, the government reduced project aid to Tk745 billion from the original ADP allocation of Tk930 billion.